Valve has explained why we never got Half-Life 2: Episode 3.
Half-Life: Alyx is not only the first new entry in the dormant series in well over a decade, it also represents Valve's return to making the games that put it on the map all those years ago.
But the question of why the developer never followed up Half-Life 2: Episode 2 and finished that story was never adequately answered, until today. Valve, according to level designer Dario Casali, sees Half-Life games as means to push technology forward, or solve complicated problems.
While Valve was happy with the episodic model at the start, the developer's ambition quickly grew. This lead to a two-year development cycle for Episode 2, as opposed to Episode 1's roughly one year of development.
"We found ourselves creeping ever forward towards, ‘Well, let's just keeping putting more and more, and more, and more stuff in this game because we want to make it as good as we can,'" he told IGN. "And then we realised these episodes are turning more into sequels."
This lead Valve to rethink its approach to game development, and the so the studio started looking for "what is going to make that next big impact." This search actually resulted in Half-Life prototypes that the public never saw. All these cancelled projects, well, weren't fun to play.
"Our judge and jury is always the playtesting," Casali explained. "It never comes from us. It always comes from somebody outside. And they always tell us how we're doing. And no matter what it is that we're doing, we get validated by that playtesting process, and we stick to that religiously."
During this phase, Valve was also working on Source 2.0, as it wasn't happy with the original's limitations. Having had a terrible experience developing an engine (Source 1.0) and a game at the same time (Half-Life), Valve decided to focus on creating the engine. Once work on Source 2.0 was done, Valve went back to Half-Life.
The result of this work is Half-Life: Alyx, which solved the studio's dilemma as far as making Half-Life games push game design forward. VR was a no brainier, and so it was.